Reacting to the government’s move to raise the Securities Transaction Tax (STT) on futures and options (F&O), Zerodha co-founder and chief executive officer Nithin Kamath said, “If you think the Indian markets are speculative, the US markets will blow your mind.”

In a post on X (formerly Twitter) Kamath said the US markets are a “pure speculative mania”, adding that investors there can “bet on literally anything”.

The Indian entrepreneur’s remarks come after Finance Minister Nirmala Sitharaman announced a sharp hike in STT on both futures and options during her Union Budget 2026 speech.

On 1 February, FM Sitharaman said the rate will be increased by a massive 150% on futures transactions and 50% on options transactions. STT on futures has been raised to 0.05% from 0.02%, while the levy on options transactions has been increased to 0.15% from 0.01% earlier.

Kamath explains why US markets are highly speculative

He highlighted how options exist for nearly every asset, crypto trading runs round the clock, and people can place bets on sports, weather, and even political events through platforms like Kalshi and Polymarket.

“In a sense, every aspect of American life has been gamified and turned into something you can bet on,” he added.

Shortly before the Union Budget 2026 presentation, Kamath had flagged concerns over STT, saying that as a market participant, he had always hoped that the government would reduce the levy, but it has instead continued to rise.

What’s the controversy around STT?

Several market commentators and experts echoed Kamath’s view, noting that STT was originally introduced when long-term capital gains (LTCG) tax was made zero, but with LTCG now back, the overall tax burden on investors has increased.

STT was introduced in India on 1 October 2004 under the Finance Act, 2004. It was implemented to replace LTCG, simplify tax collections, and reduce tax evasion on the sale and purchase of equities and derivatives. However, LTCG on listed equities was reintroduced in India in the Union Budget 2018, while STT was not rolled back.

Meanwhile, a day earlier, India’s largest stock exchange, National Stock Exchange (NSE), also expressed hope that the government will reconsider the hike in STT on index and single-stock futures from the next fiscal year, as announced in the Budget for FY27.

The government has defended its decision to raise the STT on F&O trading, largely to curb what it sees as excessive speculative activity in the derivatives segment. Several reports have said that nearly 90% of retail investors lose money in derivatives.